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The Importance of Customer Experience As A Metric

A Q&A with Kerry Bodine of Forrester Research

What is Customer Experience? The customer service industry has been buzzing about this trendy metric quite a while now, and many companies have adopted it into their business strategies. But what can measuring Customer Experience do for your company? And is it really worth making the investment to cultivate it?

ICMI asked Kerry Bodine, Vice President & Principal Analyst at Forrester for her take on the emergence and evolution of Customer Experience as a quantifiable metric.

ICMI: Forrester defines customer experience (CX), as "How customers perceive their interactions with your company." How did CX evolve from a buzzword/trend to a quantifiable metric?

Kerry: There have been a lot of contributing factors.

Rapid technology developments over the past decade have commoditized competitive differentiators of the past like manufacturing strength, distribution power, and information mastery. The result is that people today have more choices than ever about the products and services they can buy – and more information than ever about those choices. That means that companies can no longer compete on product features or pricing. The experience is all that’s left.

Social media has also enabled customers to publicly expose the bad experiences they’re having with companies. Executives that want to avoid the hassle of negative corporate publicity have realized that their best bet is to deliver a great customer experience.

ICMI: Some major companies have earned success from the CX they provide. Is this true for all customer service providers? What if my contact center is small?

Kerry: It doesn’t matter how big or small your contact center is, what industry you’re in, or whether your company is B2C or B2B. Customer experience is critical for all companies. That’s because it ties directly to loyalty metrics. The better the customer experience a company provides, the more likely their customers are to purchase again and to recommend the company to friends – and the less likely customers are to take their business to a competitor. Those loyalty metrics translate directly into additional revenue through additional purchases, word of mouth, and churn reduction.

Our research has shown that better customer experiences also drive cost savings. This makes complete sense when you think about customers’ likely behavior after service interactions that didn’t resolve their problem or left them feeling uneasy about the outcome: they’ll contact the company again.

ICMI: What are the metrics/KPIs/data should customer service leaders or executives be looking at to find out how they’re doing?

Kerry: Three types of data are the building blocks of a solid customer experience measurement framework:

  • Perception metrics tell you how customers think and feel. Typically you want to ask: Did we meet your needs? Were we easy to do business with? And were we enjoyable to do business with?
  • Descriptive metrics tell you what really happened. This is the operational side of the equation. For example, a customer might tell you she “waited for forever” to talk with a customer service rep. Descriptive metrics will tell you that she really waited seven minutes.
  • Outcome metrics tell you what customers will do as a result. To gather this data, you should ask questions like: How likely are you to buy from us again? How likely are you to recommend us to a friend or colleague? How likely are you to take your business to a competitor?
Together, these metrics tell you what’s going right (or wrong) and what business results you can expect to see by making specific customer experience improvements.

ICMI: What do you foresee for the CX for customer service in next 5-10 years?

Kerry: I expect to see more customer service organizations tapping into big data. For example, customer service reps will have visibility into which website pages customers looked at prior to calling or if they complained about a particular product on Twitter the week before. In additional, they’ll have deeper insights on each customer’s relationship with the company over the years, such as their purchase patterns and complaint history. All of this data will allow CSRs to be more proactive in their efforts to help customers resolve problems.As social media continues to embed itself in people’s daily lives, companies will also invest heavily in technology platforms that will enable them to respond more swiftly and effectively to complaints and questions that come in through social channels.

However, the customer service organizations that truly differentiate their experience will focus on another key asset – their people. They’ll invest in agent training, revamp their metrics and compensation programs, and empower reps to do the right thing for customers. American Express is an early example. It spends eighty percent of its call center training on skills that help its customer care representatives actively listen to callers’ needs and tailor their conversations in appropriate ways. Amex also gives reps the ability to earn an incremental 25% to 35% of their base pay based on customer feedback. Companies that invest similarly will gain an edge on rivals who rely on outdated performance metrics like average handle time and keep teaching agents to parrot back robotic-sounding scripts.

In short, Customer Experience might just be one of the most important metrics in the customer service industry today. Because today’s customers are more connected to one another than ever before, they not only expect the best service and experience, but they are eager to share that experience with fellow customers. And it’s especially important to understand your customers and what they perceive as great service and a great experience.

For more on the Customer Experience and its evolving role in today’s customer service arena, watch ICMI's complimentary webinar, Customer Experience: From Buzzword to Strategic Differentiator. The webinar features presentations by Kerry Bodine, Mary Murcott, CEO & President NOVO 1 Contact Centers and Laura Bassett, Director of Marketing, Avaya’s Customer Experience Management and Emerging Technologies Groups.

Christina Hammarberg is the former associate editor at ICMI.